Higher Taxes For The Rich: Fair Or Warfare? House Budget Committee Chairman Paul Ryan and other Republicans insist the only way to reduce the budget deficit is to cut spending, but one group of wealthy Americans has a different solution. The Patriotic Millionaires are asking Congress to raise taxes on them.

Higher Taxes For The Rich: Fair Or Warfare?

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MICHEL MARTIN, host: I'm Michel Martin, and this is TELL ME MORE, from NPR News. Coming up, it's LGBT pride month, that designation made by the White House for the third year in a row. We've been observing the month with conversations that explore issues of particular interest to the lesbian, gay, bisexual and transgender community. Today, we're going to talk about a new report on the health challenges of the LGBT community and new information about how we know just how many LGBT people there really are. That conversation in a few minutes.

But first, another conversation about the economy. So much of the conversation in Washington these days is about cutting government spending - not if, but how much. But a new group says the solution to the budget deficit is to raise taxes, and that we're not talking about so-called tax-and-spend liberals. This comes from a group of very wealthy Americans, 200 of them, who call themselves the Patriotic Millionaires for Fiscal Strength, have signed a letter to President Obama and Congress asking them to raise their taxes and the taxes of the 375,000 other Americans who earn more than one million dollars a year.

Let's listen to a clip from a video the Patriotic Millionaires released yesterday.


UNIDENTIFIED MAN #1: We shouldn't be wallowing in our riches while everybody else is suffering.

Ten years ago, you gave me a tax cut I didn't want and I didn't need.

UNIDENTIFIED WOMAN #1: Fix the mistake you made.

UNIDENTIFIED MAN #3: Because it is the right thing to do.







UNIDENTIFIED MAN #1: Tax me, because my country, our country, means more than my money.

MARTIN: We wanted to talk more about this, so we've called on entrepreneur Dennis Mehiel. He is chairman of the U.S. Corrugated. They make cardboard boxes, and they operate plants in 15 states, among other businesses that he runs and owns. And he's with us now from NPR New York. Welcome to the program. Thank you for joining us.

DENNIS MEHIEL: Michel, it's nice to be here.

MARTIN: We also wanted the perspective of a small business owner, so we've called upon Andy Shallal. Now, we've called up on him from time to time for commentary about the economy and how things are going. He owns the restaurants Bus Boys and Poets and Eatonville in the Washington, DC area, and he's with us once again in our studios in Washington, DC. Thank you so much for joining us once again.

ANDY SHALLAL: Thanks for having me, Michel.

MARTIN: So Dennis, now, I'm going to start with you. As you know probably better than anybody, kind of the narrative around the economy these days is cutting spending, not raising taxes. And Republicans have said that it's core issue for them in these negotiations, that they are not in favor of raising taxes at all. Why do you feel that it's important to raise taxes right now, and on you?

MEHIEL: Well, because you got to go where the money is, you know. I mean - but the reason we need to increase the marginal tax rate, in my view, on higher earners, is because it's absolutely essential. It's part of bringing some balance to our fiscal policies in this country. And if people say that the only approach is to reduce expenditures as we look out into the future, then what they're really saying is that the sacrifices that need to be made to move toward more balance in our fiscal policies, that those sacrifices have to be made by the people who essentially have the least.

MARTIN: Well, part of the timing around this effort by you and your other wealthy individuals is that 10 years ago, President Bush signed a law that heavily cut taxes. And the argument is that cutting taxes actually enhances economic growth by creating more jobs, giving people more money to spend and invest. And so I wanted to ask, you did you personally benefit from the Bush tax cuts, and what did you do with the money?

MEHIEL: Well, the answer to the first half of the question: I did benefit. My marginal tax rate is lower. It saves me, whatever, you know, two or $300,000 a year that I might otherwise have paid. It's a spurious argument that maintaining historically low marginal rates on very high earners, that somehow if they had to pay an extra 3 or 4 percent - which would be from $30,000 a year up to some multiple of that, depending on how much they own - that we're going to have less jobs. It just, you know, it's wrong, and history disproves it.

MARTIN: Andy Shallal, what's your perspective on this? And one of the reasons that I wanted to get your perspective on this is that the argument is that small businesses are particularly affected by the growth in government spending, because it reduces the amount of capital available to them. So tell me, what's your perspective on this?

SHALLAL: Well, I mean, the fact of the matter is that most of the small businesses that we're talking about would not be affected by this proposed sort of pull back in the Bush-era tax cut. But the other part is that for me, as a Subchapter S business, I have an incentive to spend more money before the end of the year, so I don't claim it as income. So, for me, I spend it on infrastructure. I spend it on equipment. I spend it on refurbishing the places, and so on.

So that is an incentive. I could never understand the other argument of, you know, if you're going to have more money, it's going to be taxed. Well, spend it.

MEHIEL: I want to ask Andy a question.


MEHIEL: OK, because what's put forward by the other side in this debate is that a so-called small business person - whatever that means - if you were going to earn a million dollars for the year, for example, then on the arithmetic, you might experience 20 or $30,000 more in taxes for your Subchapter S then otherwise might have been the case if you made a million bucks. Now, the argument is because you paid $20,000 or $25,000 more in taxes and you had an opportunity to open a restaurant around the corner that's going to be successful, that having made a million - you know, $25,000 less than a million dollars, that you would not open that restaurant. I mean, I think it's preposterous on its face.

SHALLAL: Well, I would agree with you.

MEHIEL: Yeah, so it just, you know...

SHALLAL: (unintelligible) irrelevant.

MEHIEL: It really doesn't hold water, and what it suggests is that regardless of the talking points and staying on message and all that, that the motives are different.

MARTIN: If you're just joining us, you're listening to TELL ME MORE, from NPR News. We're speaking to Dennis Mehiel. He is one of the 200 millionaires who signed a letter asking the government to raise their taxes. We're also talking with Andy Shallal. He's owner of Bus Boys and Poets here in Washington, DC. We called him for a small business owner's perspective. Mr. Mehiel, one of the things I was curious about is that when the prospect of raising taxes is offered up, sometimes - well, there are two issues, here.

One is the economic theory at work. That's what, sort of, House Budget Committee Chairman Paul Ryan says that his issue is not politics, it's economic theory. He really believes that keeping taxes as low as possible is the thing that stimulates growth in the economy. But the other argument is political, and that the argument is that this is class warfare, that when you talk about raising taxes, really, what - you're pitting, you know, the wealthy and successful against the less successful. So - and I'm curious, though, why you think your argument doesn't seem to have greater resonance to this point, particularly given that the number of people who are making this kind of money are a minority in the population. So why do you think that is?

MEHIEL: Well, to begin with, I think we can rationally conclude that those people who are making the most money - and we've got people making up to a - I mean, I'm a piker next to a lot of the guys on that letter, OK - have the resources and the access to policymakers to elect officials and so on that enable them to amplify their point of view in a way that the average person can't. When people talk about class warfare, you know, I struggle with that a little bit.

I think we have increasing income diversity in the country - disparity, I think is the word I was looking for. And as that grows - and it has grown substantially over the last 30 or 40 years - it puts the whole social contract under pressure and can lead to conditions and attitudes that we would not recognize as part of the value system that we have in this country. But we're not trying to create class warfare by pitting one group against another, we're saying that everybody needs to contribute to putting our fiscal house back in order.

MEHIEL: And when, I'll just say, but not to be overly partisan, but the Republicans and Mr. Ryan say that it's absolutely wrong to ask anybody irrespective of how great their resources are to chip in, in what everyone agrees is a very, very significant challenge for our country. Makes no sense to me. So I think they are pitting the classes against each other by framing the debate on that basis. I just - I reject that argument.


SHALLAL: And the statistics have sort of worn out. I mean, since 1979 the income disparity has gone much, much wider. The top one percent of earners since 1979 has seen an increase of 280 percent in their income. The lower two percent of earners have seen an increase of 16 percent. The disparity is becoming wider and wider.

I want to see more customers out there with money to come spend in my business. I don't want to see that as we're talking about, the possibility of having the haves and have-nots and having this big disparity in our classes here in this country.

MARTIN: Andy, before we let you go, I wanted to ask, just final thought even as we are talking, they're still talking about a plan to reduce the budget deficit. From your perspective as a small business owner, what would you like these people to keep in mind, these lawmakers to keep in mind as they're having these discussions? What do you think is the key fact for you?

SHALLAL: You know, we tend to think in this country that the idea of leveling the playing field is the way that you have fairness. But the reality is that people with money have a head start. And therefore leveling the playing field is only going to set people that don't have money further back and create a bigger, wider schism between the two.

So we have to have more progressive tax laws in place in order for us to be able to bridge that gap so that we don't have this potential, really, for this possible class warfare that's always bubbling underneath the surface in this country.

MARTIN: Mr. Mehiel, final thought from you?

MEHIEL: Just that I'm hoping and I'm praying that our policymakers and our elected officials find a way to do the right thing. The current proposal that our group has made is really not - doesn't go anywhere close to as far as it needs to go. It would be a step in the right direction. And out of that, hopefully will come - will put to rest this idea that they're going to hold our country's credit rating and financial stability hostage to what appears to be an ideological agenda. Hopefully, cooler heads will prevail and we can start to make some consensual progress in this country.

MARTIN: Dennis Mehiel is the chair of U.S. Corrugated. He's also a member of a group called the Patriotic Millionaires for Fiscal Strength. They've just signed a letter to President Obama and the Congress asking them to raise their taxes and the taxes of the hundreds of thousands of other Americans who earn more than a million dollars a year. He was with us from NPR New York.

Andy Shallal was also with us. He's the owner of the Busboys and Poets restaurant group in Eatonville, here in Washington, D.C. area. And he was here with us in our Washington, D.C. studio. Thank you both so much for joining us.

MEHIEL: It's a pleasure to be here.

SHALLAL: Glad to be here. Thank you.

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